SVR or new fixed at 90% LTV?

Mercator_2

Hi,

I originally posted this on the House Prices, the Economy & Recession forum and someone suggested I post it here instead.

I got a mortgage 2 years ago with Alliance and Leicester and am coming to the end of the fixed period. Thanks to falling house prices my current LTV is over 90% (at the start of the term it was 85%). With savings I could bring it down to 90%.

I would quite like to get another fixed rate but A&L said no chance with them (their lowest LTV is 85%). I could get a 5 year fixed for about 6.5% with other providers -- or stay on A&L's SVR, which is now 5.09.

I'm tempted to stay on the SVR and aggressively overpay the mortgage, even though I know that should the price of the house fall another 15-20% by the end of this year then I'll still be at around the 90 - 95% LTV mark.

What are your thoughts on the 6.5% 5-year fixed (with £300 fee) v. the SVR of 5.09%?
If I overpay and then interest rates increase sharply will the lender be more sympathetic if I have difficulties with the mortgage repayments if I've been overpaying up to that point (e.g. if the interest rate stays at 5.09 I would want to overpay by double the usual £900)?

Thanks.

payless

- just a side note- some of A&L's fixed rates had a follow on tracker rate rather than SVR- have you checked yours

Mercator_2

Hi payless,

Yes I've phoned them up and they confirmed that the choice is go onto their SVR, find about £18,000 to swicth to their 85% LTV or find another lender.

Cheers,